How much will the changes to OSAP actually save?

By Jacqueline Beaulieu

Ontario’s Provincial Government recently announced changes to the Ontario Student Assistance Plan (OSAP), among other changes to tuition and ancillary fees. OSAP provides eligible residents with grants and loans towards covering the costs of post-secondary education. Many stakeholders are weighing in on these changes and there are numerous perspectives to consider. Having read many press releases, news articles, op-eds, and social media posts responding to these changes, I perceive some confusion regarding i) the cost savings and ii) what is known regarding the previous iteration’s contributions to post-secondary access.

The recent evolution of OSAP

On January 17, 2019, Minister of Training, Colleges and Universities Merrilee Fullerton  couched the changes to OSAP as a response to a perceived need to restore financial sustainability to the program given recent findings of Ontario’s Auditor General. The Province indicated that OSAP is costing approximately $2 billion per year — a 50% increase since the 2016-17 academic year. According to a recent Auditor General’s report, enrollment only increased by one per cent at universities and two per cent at colleges during this time period (p. 456). The Province supports the Auditor General’s view that the rates at which Ontarians are accessing higher education are not commensurate with the increased investments in OSAP.

When considering this perspective, it is helpful to have a good understanding of how and why OSAP evolved in recent years.The program has undergone substantial changes this past decade. In 2012, former Premier Dalton McGuinty’s Liberal government implemented a “30% off tuition” non-repayable grant program administered via OSAP. Eligibility was limited to Ontario residents enrolled full-time directly from high school whose family income equalled up to $160,000.

Former Premier Kathleen Wynne’s subsequent Liberal government eliminated the “30% off tuition” program to direct more of the available funding to students from lower-income families. Beginning in the 2017-18 academic year, students whose family income equalled up to $50,000 were eligible to receive non-repayable grants equal in value to tuition. Some students whose family incomes equalled up to $83,000 were also eligible to receive grants equivalent to tuition. Additional students whose family income equalled up to $175,000 could receive grants of lesser values that corresponded to their family income. Mature students – defined as those who had graduated high school more than four years prior – could receive grants if their family income did not exceed the eligibility threshold. It is important to note that students enrolled in OSAP prior to these changes were grandfathered to continue receiving grants at 2016-17 levels.

The Wynne government’s changes to OSAP were commonly referred to as the “free tuition program”, although the program did not actually waive lower-income students’ tuition fees. It responded to the recommendations of the 2012 Drummond Commission Report regarding enabling lower-income students to access funds upfront that they would otherwise receive later in life when claiming provincial tuition and education tax credits.

In a recent episode of Ontario Loud Podcast, former Liberal staffers Sam Andrey and Alvin Tedjo indicated the Liberals were also interested in addressing an equity issue: that the highest-income quartile was receiving four times the amount that the lowest-income quartile was receiving when claiming provincial tuition and education tax credits. Beginning in the 2017-18 academic year, provincial tuition and education tax credits were eliminated to redirect the corresponding pool of money towards providing upfront grants to lower and middle-income students. It was believed that providing upfront grants under a simple banner of “free tuition” would further enable lower-income students to perceive post-secondary education as within their reach. To amplify this message, colleges and universities were required to demonstrate via their websites how students’ grants would cover or lower their costs of attendance.

Actual Cost Savings

How much did the “free tuition” program actually cost? Recall that the Province’s announcement described OSAP as costing $2 billion per year, representing a 50% increase since 2016-17. However, this price tag and per cent increase have not yet factored for costs associated with provincial tuition and education tax credits in 2016-17 and savings stemming from the elimination of these credits in 2017-18.

After taking this into account, the total costs to the Province rose from $1.35 billion (2016-17) to $1.6 billion (2017-18) – an increase of approximately 20% (Auditor General’s Report, 2018, p. 468). While still a notable increase, the actual overall costs to the Province and taxpayers are substantially less than the announcement might lead those unfamiliar with the changes to education and tax credits to believe.

Impact of the Wynne Government’s Changes to OSAP

It is also important to acknowledge that while enrollment has only expanded by 1% at universities and 2% at colleges, overall student demographics may have changed. Due to a lack of data, we do not know how many more lower-income students have enrolled since the “free tuition” program’s implementation (see this and this).

At the same time, there is a sense that some mature students receiving grants have access to alternate means of financial support. Again, the question is: how many? Given the lack of data, it will be difficult to draw evidence-based conclusions on whether or not (and if so, how) the Wynne government’s changes to OSAP improved access to post-secondary education.

Altogether, confusion surrounding the cost savings coupled with the relative inability to demonstrate the prior program’s contributions to access will challenge the public when assessing the potential merits and drawbacks of the Ford government’s changes to OSAP.

 

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